Apr 14, 2016
- Complete the sentences below. Use the key words if necessary.
- Manufacturers’ pricing strategies
key words
Companies’ prices are influenced by production and distribution costs, both and . Mark-up or cost-plus pricing: some firms just calculate the — the expenses involved in producing each individual product - and add a percentage.
Most companies consider other factors, like demand, competitors’ prices, and — the quantity of sales/profit a business wants to achieve.
: some companies launch — to introduce a product onto the market — products at a price that only gives them a very small profit, because they want a big — the proportion of total sales in the market. This allows them to make profits later because of — the cost of producing each unit decreases as the volume of production increases.
: some customers will pay almost any price, e.g. for a new hi-tech product, so the company can charge a really high price, then lower it to reach other — groups of consumers with similar needs and wants.
If a company has a higher demand for its products than it’s able to supply, it can raise its prices. This is often done by — companies that are the only supplier of a product or service.
or : products positioned at the luxury end of a market need to have a high price: the — the customers whose needs the company wants to satisfy — probably won’t buy them if they think the price is too low.
: if a product is almost identical to competitors’ products, companies might charge the same price.
Retail pricing strategies
key words
: retailers (e.g. supermarkets) often offer some items at a very low price that isn’t profitable, to attract customers who then buy more products which are profitable.
or odd-even pricing: many producers and retailers believe a customer sees a price of $29.95 as the $20 price range rather than the $30 one.
Elasticity: demand is if sales respond directly to price variations — e.g. if the price is cut, sales increase. If sales remain the same after a change in price, demand is .
- Manufacturers’ pricing strategies
- Use the verbs to complete the sentences below.
- Economists say that if sales increase when you . . . a price, demand is elastic.
- charge
- cut
- raise
- pay
- If we have more customers than products available, we generally . . . our prices.
- charge
- raise
- pay
- cut
- Luxury goods companies make huge profits, because their customers are prepared to . . . really high prices.
- raise
- cut
- pay
- charge
- Our product’s really the same as our competitors’, so we’ll probably . . . the same price.
- raise
- cut
- pay
- charge
- After we’ve skimmed the market, we can . . . the price to get more customers.
- lower
- raise
- pay
- charge
- Economists say that if sales increase when you . . . a price, demand is elastic.
- Match the pricing strategies in the box with the statements below.
- box
- Because of our famous brand name and our reputation for quality, we can charge a very high price. —
- We never use whole numbers like $10 or $20. Our prices always end in 95 or 99 cents. —
- We launch our products at high prices, and then reduce them a few months later to get more customers. —
- We just get the cost accountants to work out how much it costs to make the product, and add our profit. —
- Demand isn’t very elastic, so we charge the same price as our main competitors. —
- We actually sell a few products at breakeven price, but this brings in customers who also buy a lot of other things. —
- We charge a really low price at first, because we want to sell as many units of the product as possible. —
- box
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