UNIT 20: SETTING THE PRICE

Task 1: Answer the following questions

1. How important is price?

Prices are measures of goods and services value in terms of money. For buyers, price has
operated as the major determinant of buyer-choice apart from non-price factors. For
sellers, price still remains one of the most important elements determining company share
and profitability. Price is the only element in the marketing mix that produces revenue,
other elements reperesent costs.

2. What are common mistakes when setting the price?

The common mistakes when setting the price are:

 Price is too cost oriented

 Price is not revised often enough to capitalize on market changes
 Price is set independently of the rest of the marketing mix rather than as an instrisic
element of marketing-positioning strategy.
 Price is not varied enough for different product items and market segments.

3. How do companies avoid making mistakes when setting the price?

Companies can avoid making mistakes when setting the price in variety of ways:

 Price shouldn’t be too cost oriented

 Price should be revised often enough to capitalize on market changes
 Price shouldn’t be set independently of the rest of the marketing mix rather than as
an instrisic element of marketing-positioning strategy.
 Price should be varied enough for different product items and market segments.

4. How do companies handle pricing ?

Companies can hande pricing in variety of ways:

- In small companies, prices are often set by top management rather than the
marketing or sales department.
- In larges companies, pricing is typically handled by divisional and product-line
managers.
- In industries where price is a key factor (aerospace, railroads, oil companies), price
is set by pricing department.

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Task 2: Fill in the blank

1. ...........................is the only element in the marketing mix that produces revenue. (price)

2. Through most of history, price has operated as the major ........................of buyer choice.

(determinant)

3. Companies with sound .........................can gain market share and profitability (pricing
strategies)

4. In small companies, prices are often ................................ by top management.(set)

5. In large companies, prices are often set by ...........................................managers. (divional

or product-line)

Task 3: Make up a full sentence using suggested words

1. Through/ history/ sellers/ buyers/ make/ bargain/ reach/ suitable price

Through most of history, sellers and buyers made bargaining to reach suitable price.

2. Companies/ sound/ pricing strategies/ gain/ market share/ profitability

Companies with sound pricing strategies can gain market share and profitability.

3. price/ remain/ one/ most important/ element/ determine/ market share/

profitability

Price still remains one of the most important elements determining company market
share and profitability.

4. price/ only element/ marketing mix/ produce/ revenue/ ,/ elements/ represent/

costs

Price is the only element in the marketing mix that produce revenue, other elements
represent costs.

5. price/ be/ various/ different/ products/ market segments

Price is not varied enough for different products and market segments.

6. large/ companies/ ,/ prices/ handle (set)/ divisional/ product-line managers

In larger companies, prices are typically handed by divisional and product-line

managers.

7. small/ companies/ ,/ prices/ set/ top management/ rather than/ marketing/ sales
department

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In small companies, prices are often set by top management rather than the marketing
or sales department.

8. Through/most/history/price/set/buyer/seller/negotiate/each other

Through most of history, prices were set by buyer and seller negotiating with each
other.

9. Through/most/history/price/operate/major determinant/buyer/choice

Through most of history, prices has operated as the major determinant of buyer-choice.

10. Non-price / factors / become / relatively / more / important / buyer

Non-price factors have becomce relatively more important in buyer-choice behavior in

recen decades.

11. Top management/set/general/pricing/ objectives/policies/often/approve/ prices/

propose/ lower levels/management

The top management sets general the pricing objectives and policies and often
approves the prices proposed by lower levels of management.

Task 4: Translation

One of the biggest challenges you face as a small business owner is deciding how to price
your product or service. With so many types of pricing strategies at your disposal, how
do you decide which one is best for your business?

Choosing the appropriate pricing strategy can have a substantial impact on your business.
Price it right, and you can boost your bottom line and capture new customers. Price it
wrong, and you risk missing out on hard-earned sales or valuable revenue.

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