Pricing (Part I)

In the market economy the business success of any company or entrepreneur mostly depends on the correctly chosen strategy and tactics of pricing on goods and services. Pricing is a rather difficult process because prices mostly depend on the situation in the market. The range of political, economic, psychological and social factors has a great influence on the price level. Today your price can be determined by the costs factor, and tomorrow its level will depend on the customer's behavior.

However, nowadays the most part of entrepreneurs of our country has no neces­sary theoretical and practical knowledge of the complicated mechanism of goods and services pricing. As a result, establishing prices often make serious mistakes that im­mediately reflect on the financial results, in some cases leads to suffering losses and sometimes even to the bankruptcy of a business (company).

To avoid this situation any economist and any entrepreneur must acquire the the­ory and practice of pricing.

All commercial and nonprofit organizations lace the problem of determining prices for their goods and services. In the market economy pricing is a very difficult process which is influenced by plenty of different factors and based not only on the marketing recommendations. But nevertheless, the right choice of price strategy, ap­proaches to the pricing for new and still manufactured goods and services in order to increase volumes of realization and commodity circulation, to enlarge production and firm the company's positions in the market is one of the marketing functions.

Prices and the price policy are ones of the major components of the marketing ac­tivity, which importance is permanently rising in our days. Prices are in close de­pendence on other variables of the marketing and other firm's activities. Pinal com­mercial results mostly depends on prices and it's important to mention that in the long run correct or fault price policy brings positive or negative results of firm's activity.

The essence of the correctly chosen price policy in the marketing is to fix and vary prices in dependence on a situation in the market in order to win a certain market share, provide the planed profits and solve other strategic and operative tasks. Work­ing out the general price policy all decisions are gathered into an integrated system.

Slating a single price for all buyers is a comparatively new idea. It has been formed historically - a price was a result of the deal between a buyer and a seller. Usually sellers asked for a price higher than they counted to get first. In their turn buyers asked for a price lower than they were ready to pay. While dealing with each other they usually came to the price that was mutually acceptable to everyone. Com­mon prices were widely admitted only to the end of 19 century with the appearance of large retail enterprises, which proclaimed "the strict policy of common prices" as they offered a huge variety of goods and employed a great number of employees.

Vocabulary

an entrepreneur - предприниматель

nonprofit – некоммерческий

commodity - товарный essence - сущность to gather - собирать, набирать mutually - взаимно, обоюдно an employee - служащий

1. Answer the questions:

1. Why is pricing a rather difficult process?

2. What factors have a great influence on the price level?

3. What is the essence of the correctly chosen price policy in the marketing?

4. What are the major components of the marketing activity?

2. Continue the sentences:

1.Nowadays the most part of entrepreneurs of our country has no...

2.All commercial and nonprofit organizations lace...

3.Prices are in close dependence on...

4.A price was a result of the deal between...

3. Translate from English into Russian:

1. The problem of determining prices.

2. The bankruptcy of a business (company).

3. "The strict policy of common prices".

4. Slating a single price for all buyers.

4. Make a situation, using these words:

1. an entrepreneur

2. determining prices

3. the bankruptcy of a company

4. price policy

5. Are the following statements true or false?

1. Establishing prices don't make serious mistakes.

2. Prices and the price policy are ones of the major components of the marketing activity.

3. The range of political, economic, psychological and social factors hasn't a great influence on the price level.

4. Usually sellers asked for a price lower than they counted to get first.

5. While dealing with each other sellers and buyers usually came to the price that was mutually acceptable to everyone.