Pricing (Part II)

Historically prices were the basic factors that determined a customer's choice. This is still true for the third-world countries among the population groups living below the normal living standards. Nevertheless, for the last tens years price factors such as sales stimulation, distribution of goods and services for the customers have obtained a certain influence on the consumer's choice.

The way firms approach the pricing problems may vary. In small firms prices are usually determined by the higher leadership. In large companies department supervi­sors and assortment supervisors deal with the pricing problems. But still at this level the higher leadership determines the general targets of the price policy. The higher

leadership also confirms prices offered by managers of the lower supervision. In space, railways, gas and oil industries companies often organize special pricing de­partments, which determine prices or help the others do it. Such employees as sales department managers, production supervisors, finance managers and accountants are those who also influence the price policy.

First of all a firm must determine what purposes it intends to reach with the help of the concrete goods. If the choice of a target sector of the market is well considered the approach to forming the marketing complex including pricing problems is quite evident. The pricing strategy is generally determined by decisions that were made concerning a certain position in the market. At the same time a firm can chase other targets. The clearer a firm's idea of its target the easier to determine a price. There are plenty of examples in practice: providing survival of the firm, maximizing current profits, winning leading positions in the market reaching the high quality of com­modities.

Providing company's survival becomes the general purpose under the circum­stances of hard competition and when there are too many producers in the market. It's also true in case of rapid change of the customers' needs. To provide the work of en­terprises and sales of their goods firms have to slate lower prices in hope to gel a fa­vorable customer's respond in return. Survival is more important than profits. While the prices reduced cover the production costs firms that gel into a difficult situation can continue their commercial activity for some time.

Plenty of the firms aspire to maximize their current profits. They estimate custom­ers" demand and costs taking into account different levels of prices and then they chose the price that will provide the maximization of future profits and cash and also provide maximum of costs compensation. In all these cases current finance indicators (indexes) are more important for a firm than the long-run ones.

Other firms want to be leaders in the market share indicators in hope that a com­pany getting the biggest market share will have the lowest level of costs and the high­est profits in the long run. Trying to reach the leadership in the market share they un­dertake the maximum possible decrease in prices. A variant of this purpose is to rap­idly get the concrete increase of the market share.

A firm can also make its goods the most qualitative among all the rest offered in the market. Usually it demands to determine a higher price lo cover the costs for reaching high quality and conducting expensive surveys.

Vocabulary

leadership - руководство, лидерство

a supervisor - руководитель, начальник

to chase - преследовать, выслеживать

a target - цель, задача

a circumstance - обстоятельство, условие

a commodity - товар, продукт

a current profit - текущая прибыль

qualitative - качественный

1 Put the necessary words in each of these sentences:

1. A firm can also make... the most qualitative among all the rest offered in the