Complete each sentence with a word or phrase from the box.

■ accordingly ■ auction ■ degree

■ discount ■ discrimination ■ guesswork

■ in bulk ■ markup price ■ pensioners

■ retailers ■ risk-taking ■ wholesaler

1.Some people like dangerous sports because they enjoy.......................

2 In an......................, the item for sale is sold to the customer who offers the highest price.

3 The......................is the extra money shops add to the value of something in order to make a profit.

4 In the past, forecasting the weather was just …………….

5 When you are in a formal situation, you have to dress and behave.......................

6 In the winter sales the shops often give a......................ofupto50°/₀.

7 When you buy......................, you buy very large quantities of something.

8......................is when you treat some people differently to others.

9......................are people who sell things.

10 A......................is a company that buys large

quantities of goods from factories and sells them on to shopkeepers.

11 To what......................you do something, means how much you do it.

12 Because retired people usually receive a pension, they are often called.......................

 

2 . Now read the text again and choose the kind of price discrimination that matches these descriptions.

1 A different price is charged to each customer.

A first degree

B second degree

C third degree

2 It helps make products and services more affordable to some people.

 A first degree

B second degree third degree

3 It rarely happens in real markets.

A first degree

B second degree

C third degree

4The price falls as quantity rises.

A first degree

B second degree

C third degree

5 It happens on the Internet.

A first degree

B second degree

 C third degree

 

Now listen and complete the summary with words or numbers.

The online auction site eBay was started in (1)D......................by Pierre Omidyar. He started it as a (2).......................but it became a huge

business. On eBay, sellers show what they have and buyers make (3)......................for the item. The highest bidder wins. The system is an example of (4)......................degree price discrimination and it is very successful. Worldwide, the website has (5)......................users. It trades $1, 500 worth of goods every (6).......................The most expensive

item sold on eBay was an (7).......................It sold for $(8).......................

 

4. Discuss these questions with your partner.

-» Do you think consumer surplus is a good measure of welfare?

-» Is price discrimination fair?

-» Would you ever buy something at an auction or on the Internet?

 

Give a two-minute talk on price. First make notes below on the following.

-» What is market price?

-»What is consumer and producer surplus?

-»What is price discrimination and why do producers use it?

 

Imagine that you’ve got a good idea for an Internet commerce site (an Internet site which is also a business).Tell your friend what your idea is.

PARAGRAPH 1

Thank your friend for his/her last letter. Make a comment about news that they told you in their letter. Tell them your news.

PARAGRAPH 2

Describe your idea for an Internet commerce site.

What product will you sell / what service will you provide?

PARAGRAPH 3

Explain how you got the idea. Say why you think it will work.

 

 

Dialogue

Dick introducing a new line of products and is talking to his friend Tom, a business consultant, about it.

Dick It’s the first time when I’m in business for myself.  

Tom Don’t worry. The store has always been doing well. It has a great location and as far as your new line of merchandise...

Dick That’s what I wanted to talk to you about. Can you give some ideas how to charge the prices? With pleasure. Generally, there are two types of pricing policies. There is price emphasis and price deemphasis.

   Dick What’s the difference?

Tom The price emphasis policy emphasizes low prices. This encourages sales. But low price doesn’t give extra services.

Dick So, a really low price means no credit, home delivery, repair, installation and other services.

Tom That’s what I mean. But many people are interested only in the low price and not in the extra services.

Dick Yes, and vice versa. The price which I  set determines the number of sales. I must think thoroughly about it.

Tom A good example of price emphasis is “loss leader” pricing. It means that you  choose one item – let’s say an electric razor – at a price just above the cost. The customers will come to your shop to buy this loss leader item. But since they are inside they can decide to buy a few other things they need.

  Dick It sounds interesting. What other things can you tell?

Tom There is also off-even pricing. Let s say sell a  tape recorder for $69.95 instead of  $80.00. Though it is in fact about the same, the low price can produce a favorable psychological effect.

Dick What are the other ways to attract the customers?

Tom First of all, remember that you are going to compete with well-known products, so you should start with specially low prices. It’s important to advertise this. You should use newspaper ads, maybe a radio spot, maybe do a big window and floor display.

Dick It makes sense.

Tom And you can raise the price after your customers try a new brand get to know it and like it. They will continue to buy it.

Dick I see. And what is the  price de-emphasis you mentioned before?

Tom It concerns  high quality expensive items. Price de-emphasis means that you don’t call attention to the price at all.                     

Dick I know, it concerns  our fine  department or designer fashions.

Tom Yes. I see you are going to do very well.

Dick Your suggestions seem to be very useful. Don’t for­get you have a discount on any shopping you do in my shop.

Tom In such a case I’ll be back tomorrow with my wife.

                   

                               Exercises

1. Change the sentences according to the model.

 

Model: The tape recorder is inexpensive. Your store sells Ihe tape   recorder.

The tape recorder that your store sells is inexpensive.

1. The dresses arc fashionable. The store introduced the new dresses last week.

2. The store has many refrigerators. Dick owns the store.

3. The stereo is high-priced. My daughter wants the stereo.

4. The price determines the number of sales. A retailer sets the price.

5. Very often the people don’t want extra services. Many supermarkets offer extra services.

6. Your shop should have loss-leader item. Loss-leader item will attract the customers.

7. Price de-emphasis works with high quality expensive items. Price-de-emphasis means that you don’t call attention to the price at all.

  2. Change the sentences according to the model.

Model: We won’t introduce a new line of merchandise unless you suggest it.

We will introduce a new line of merchandise if you don’t suggest it.

1. Tape recorders are popular unless the price is too high.

2. The consumers will continue to buy unless they don’t like the item.

3. The buyer can get installation services unless he wants to pay for it.

4. The salesman will help you unless he is too busy.

5. People won’t try a new product unless there is advertising.

6. Customers won’t buy the new brand, unless the price is low.

7. They won’t raise the price unless it is necessary.

 

 3. Answer the questions.

1. In what way were the prices charged in this country?

2. What is your idea of the term market price?

3. What type of pricing policy works with the majority of consumer goods? (price-emphasis, price de-emphasis)

4. What is more preferable for you in pricing: low prices with no extra services or high prices with home delivery, repair and other services?

5. Why is it so important to have loss leader item in a shop?

6. What is off-even pricing made for?

7. How can your pricing policy help to compete with well known products?

 

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